Facebook to set stock price at $38 (rumor)

Summary:Facebook is eyeing $38 as its IPO share price, on the high end of the company's price range. The price has not yet been finalized, but discussions are getting close, according to a recent rumor.

Facebook is reportedly about to price its initial public offering (IPO) at $38 a share. It could be even higher, but either way the move would value the company at more than $100 billion.

The final decision hasn't been made yet. Facebook executives and senior bankers are still discussing the price, according to a person familiar with the matter cited by the WSJ.

On Tuesday, Facebook increased its IPO price range from $28-$35 to $34-$38 per share. You can thus argue that Facebook will not be able to set its shares higher than in the low $40s, maybe $45 at the most. Most likely though, I would wager we'll see something just below $40. Right now, it looks like Facebook is pushing for the higher end of its range.

On Wednesday, Facebook increased its IPO size by 25 percent. The social networking giant is now offering some 421.2 million shares. This means Facebook could raise anywhere between $14.32 billion and $16.01 billion when it goes public (between $6.12 billion and $6.84 billion for itself, and the rest for investors). If you include over-allotted shares, meaning a grand total of 484.4 million parts of the company, Facebook could raise anywhere between $16.47 billion and $18.41 billion.

Given that Facebook is expecting to sell the entire over-allotment, the social networking giant's IPO will be the second largest U.S. listed IPO behind Visa. At a valuation of $104 billion, Facebook will become the largest U.S. company at its IPO by market value.